BOSTON — “Lines of the Future” and Zero-Based Budgeting tools are helping to reduce costs for Mondelez International, Inc. Brian Gladden, executive vice-president and chief financial officer, gave details on those two programs Sept. 10 at the Barclays Global Consumer Staples Conference in Boston.
Since 2012 Mondelez has closed, sold or streamlined 78 production facilities, and completed or announced construction of 14 greenfield or brownfield sites. Forty new manufacturing lines should be on stream by the end of this year. Both a new biscuits plant in the Czech Republic and a new multi-category plant in India should open later this year, too, Mr. Gladden said.
Mondelez has installed “Lines of the Future” in Fair Lawn, N.J., and Richmond, Va., and plans to install such lines in Salinas, Mexico. The company expects to have 40 “Lines of the Future” on stream by the end of this year and about 75 by the end of 2018, Mr. Gladden said.
|Brian Gladden, executive v.p. and c.e.o. of Mondelez|
“All these new and updated facilities will house our state-of-the-art manufacturing assets, which we call ‘Lines of the Future,’” Mr. Gladden said. “Right now, we have 26 ‘Lines of the Future’ on stream and shipping products. Seventeen new biscuit lines have been installed worldwide, including four in Salinas, with an additional seven to be installed there by mid-2016.”
He added, “As we replace old and inefficient production lines, we’re seeing significant conversion cost savings. In the facilities where we’ve installed these new capabilities, biscuits conversion costs are down by about 30%, and chocolate and gum costs are down over 20%.”
The Zero-Based Budgeting Tools are designed to reset spending, identify specific cost reductions and capture sustainable savings.
“Eighteen months into our Z.B.B. efforts, we’re delivering benefits faster than expected in all indirect cost packages,” Mr. Gladden said.
The company is building a global shared services capability to simplify and standardize over 150 back-office processes over the next two to three years. Mondelez expects to deliver cost savings of about 50% for each of these processes.Mondelez expects to reduce overheads as a per cent of revenue by at least 250 basis points between 2013 and 2016.